By Ruth Manimtim-Floresca
For the past several years, I have researched on, interviewed a lot of financial experts for, and written many articles on various finance-related topics. Somewhere in between, I came to know more about how it is to really take a good look at my family’s finances and what I could do to better secure our financial future. I acknowledge that I still have a lot to learn but I have improved on what I knew and have also taken several first steps this past year.
An article I read recently mentioned that most people’s idea of financial maturity means either getting the first paying job or making the all-important decision to get married. These life events, however, will not, and do not, affect financial stability unless you have already acquired the mindset with regards to making, keeping, and spending money. As I told my 17-year-old son a few weeks ago, I wish his dad and I could have learned many of the things we’re teaching him now about personal finance management when we were still in our 20’s. If we did, perhaps a lot of things would be different today.
But, it’s never too late to learn and to keep on learning. Here are six things I discovered that could help us become the totally finance-savvy individuals we aspire to be one day.
- Work hard and make your own money. For college students and new graduates, avoid becoming too dependent on your parents. They are not ATM machines. For family members of an OFW, don’t just wait for remittances to keep you alive. Make use of your time, be productive, and help augment your family’s income instead so your loved one would not have to stay abroad far longer than necessary. Don’t take shortcuts to getting rich (e.g. pyramid schemes, gambling, et cetera) because a large percentage of people who have done that end up with a lot less money than when they started.
- Save, save, and save. Study the power of compound interest. Whether you have decided to set aside P100, P500, or P1,000 a month in a financial institution, as long as you religiously stick to this every 30 days and do not touch your savings, no matter what, that small amount of money you allowed to grow will provide you with rewards in the future. Open a new bank account where you can transfer a fixed amount of money once a month. If you are enrolled in an online banking facility, this can be made easier via automatic transfers from your regular savings account. If you are more adventurous, study how you can earn more from investing in vehicles like time deposits, the stock market, mutual funds, and unit investment trust funds (UITFs).
- Be your own financial planner. It is not bad to take advice from others but, ultimately, it will be you who will decide where to invest and how to handle your money. Don’t just take someone else’s word and leave it to him/her to manage your money for you. Be hands on! Do your own research before making any decisions. It took several years before my husband and I finally decided to get life insurance policies after an unfortunate experience with an educational insurance company.
- Avoid getting into debt without a valid reason. Don’t borrow money unless the loan proceeds will be used for something that would help you earn money. When our PC started malfunctioning last year more often than we could use it, I bought a laptop and asked my sister to charge it to her credit card. I paid her back monthly for six months. Meanwhile, I used the laptop to churn articles and find online activities that would provide me with more income.
- Don’t become discouraged from pressing on. My husband and I have made some bad investments in the early years of our marriage. However, those made us realize that though we may make wrong decisions about money, the important thing is to make efforts to correct and avoid repeating the same blunders again. We’ve also learned that all financial decisions will not come without risks but it is not right to avoid making them for fear of committing another mistake. What matters is keeping watch over what happens after making a decision and learning from them. I am of the opinion that financial maturity can be achieved if we are determined to bounce back after experiencing setbacks.
- Live a simple life. Choose to spend money on basic needs and on a few luxuries to reward yourself every now and then. In our home, a mobile phone usually gets replaced only when the old one conks out. My kids don’t have the latest game consoles. What they have are hand-me-downs from their more affluent cousins. If they badly want a new gadget, they have to patiently plan for it and buy the thingamajig with their own savings.
I wholeheartedly believe that material things can rarely give true happiness. Family and friends, however, could. Thus, my husband and I prefer to spend more on special outings where all six of us could bond and enjoy each other’s company away from home once in a while. We treasure these simple joys with a prayer that, when they are all grown up, our kids would remember those happy times with their parents and siblings more instead of memories of being showered with stuff that had only given them fleeting pleasure.